FOR IMMEDIATE RELEASE 97-96
MEMORANDUM OF UNDERSTANDING SIGNED BY SEC, CFTC, BANK OF ENGLAND
AND FINANCIAL SERVICES AUTHORITY
Washington, D.C., October 27,1997 -- The United States
Securities and Exchange Commission (SEC), the Commodity Futures
Trading Commission (CFTC), and the Bank of England jointly
announced the signing of a Memorandum of Understanding setting
forth a pragmatic approach for cooperating and sharing
supervisory information. It is the first formal understanding
among US and UK securities, futures and banking regulators.
SEC Chairman Arthur Levitt, CFTC Commissioner Barbara Holum,
and Bank of England Governor Eddie George, signed the MOU on
behalf of their respective agencies. Howard Davies, Chairman of
the new UK financial regulator, Financial Services Authority,
also signed the MOU to confirm that its provisions will continue
upon the transfer of banking supervision from the Bank to the
Financial Services Authority some time next year.
The MOU will enhance the ability of the regulators to obtain
information about the activities of US and UK internationally
active firms, including information about their internal controls
and risk management systems. The MOU also sets forth procedures
for cooperating to address potentially significant market events
experienced by US or UK securities or banking firms. The MOU is
expected to improve the effectiveness of financial supervision in
an era of cross-border and cross-sectoral activity.
Commenting on the MOU, SEC Chairman Levitt said: "As
evidenced by current market conditions, geographic lines between
markets are disappearing and industry lines are blurring as well.
Firms that operate as securities brokers in one nation may
operate as a bank in another. This MOU is truly a milestone in
regulatory cooperation in an era where there is much truth to the
adage that a chain is only as strong as its weakest link. With
this MOU, and more importantly, with the relationships the SEC
and the CFTC have built with the Bank, the SIB, and now with the
Financial Services Authority, we are forging a very strong chain
indeed."
CFTC Commissioner Holum commented: "On behalf of the
Commodity Futures Trading Commission, I am pleased to execute
this MOU that symbolizes the increased cooperation among the
regulators of the banking, securities and futures sectors. It is
no longer possible for any one regulator to supervise adequately
firms that operate globally, and cooperation among regulatory
authorities is essential. We are therefore pleased to join in
this precedent-setting initiative that can significantly enhance
our ability to supervise firms engaged in global operations. We
join with the SEC in looking forward to increasing our existing
good relations with our UK counterparts."
Bank of England Governor, Eddie George said: "The Bank has
over recent years built up an extensive network of information
sharing agreements with overseas banking supervisors which we
will be bequeathing to the Financial Services Authority. And I
particularly welcome this MOU which cements the close
relationships that already exist between banking and securities
supervisors in the UK and the US. Such relationships are
essential in a world increasingly dominated by global financial
conglomerates."
Financial Services Authority Chairman, Howard Davies,
welcomed the MOU and said: "There could not have been a better
start for the Financial Services Authority, on its first day,
than to sign an MOU with the SEC and CFTC. It is a symbol of the
commitment we plan to give to international cooperation in the
future."
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